2B How Does a Manager Handle Layoffs?

Coca-Cola laid off 1,600 to 1,800 of its corporate U.S. and international employees.13 American Express cut costs by eliminating 4,000 jobs after failing to meet long-term revenue growth targets.14 eBay cut 2,400 jobs (7 percent of its workforce) to adapt to changing conditions.15

In the past decade, and especially during the last few years, most global organizations, as well as many government agencies and small businesses, have been forced to shrink the size of their workforce or restructure their skill composition. Downsizing has become a relevant strategy for meeting the demands of a dynamic environment.

What Are Downsizing Options?

Obviously, people can be fired, but other restructuring choices may be more beneficial to the organization. Exhibit 9–4 summarizes a manager’s major downsizing options. Keep in mind that, regardless of the method chosen, employees suffer. We discuss downsizing more fully—for both victims and survivors—later in this chapter.

Exhibit 9–4

Downsizing Options

OPTION DESCRIPTION
Firing Permanent involuntary termination
Layoffs Temporary involuntary termination; may last only a few days or extend to years
Attrition Not filling openings created by voluntary resignations or normal retirements
Transfers Moving employees either laterally or downward; usually does not reduce costs but can reduce intraorganizational supply–demand imbalances
Reduced workweeks Having employees work fewer hours per week, share jobs, or through furloughs perform their jobs on a part-time basis
Early retirements Providing incentives to older and more-senior employees for retiring before their normal retirement date
Job sharing Having employees, typically two part-timers, share one full-time position
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